Finance Secretary Lok Darshan Regmi said that Nepal government has already taken necessary steps to increase capital expenditure in the infrastrucre development. Urging project managers Regmi said Ministry of Finance is ready to work together with concerned agencies.
“We need to improve project implementation performance so that we can get more funding,” said Regmi. Secretary Regmi thanks Asian Development Bank providing continual support to Nepal.
ADB Director General for South Asia Regional Department Hun Kim urged the Government and ADB staff to improve the project implementation performance of the ADB-funded projects to tap the opportunities of increased lending space provided by ADB.
Addressing the opening session of the annual Country Portfolio Review Mission of ADB projects in Kathmandu held today, ADB Director General Hun Kim stressed the need to improve the present state of contract management.
“Following the recent reforms of ADB’s financial resource, ADB is ready to increase the annual lending level to Nepal by 60% starting 2017 from the present level of about $275 million per annum in the last five years. However, this will critically depend on accelerating the implementation of the existing projects,” said Hun Kim, Director General with ADB’s South Asia Regional Department.
Nepal’s overall performance of its portfolio has been trailing behind ADB average. Of the net available funding amount of $1.733 million spread over 33 investment projects, 55% is still to be contracted and 72% is still to be disbursed.
“The greatest challenge is that annual disbursement has persistently trailed behind annual new commitments by almost 50% in the recent years. To date, unutilized amount has reached $1,255 million, almost equivalent to 6% of GDP. This is sizable when the country’s annual capital expenditure is at less than 4% of GDP. This is not sustainable, and does not auger well to seek increased ADB funding for development projects,” said Kim.
Nevertheless, Kim also acknowledged some silver lining emerged in 2015. For example, he said that incoming projects will now be much more implementation-ready and have sizable contracts to be awarded upon loan signing. A capacity development center was established at Staff Administrative College to systematically train project staff. Kim also praised Energy Ministry for its recent delegation of the procurement authority of NEA projects from its board to management, which will substantially reduce procurement time there.
Secretary of Ministry of Energy Suman Kumar Sharma also made it clear that his ministry will take necessary step to improve the current portfolio implementation.
Head of Foreign Aid Division Baikunth Aryal said that his division is ready to provide necessary support to effectively implement the projects run under Asian Development Bank’s support.
Kenichi Yokoyama, ADB’s Country Director for Nepal called these progresses as notable and can start turning around Nepal’s overall project performance in a significant way. “We need to consolidate the progresses made and continue tackling these systemic constraints as well as project-specific problems. With these efforts, we are hopeful that annual disbursement can be substantially increased to reach at par with annual lending in the next few years, although the performance in 2016 will still depend on fuel and material supply conditions,” saidYokoyama.
Towards attaining much higher performance, Mr. Kim called for robust action plan be developed and agreed during the CPRM at project, sector, and cross sectoral levels. He also requested particular attention to set out clear recovery plan and revised completion dates for major projects such as Melamchi water supply, Tanahu hydropower, and Tribhuvan and Gautam Buddha airports, and other large scale highway and transmission line projects.
The CPRM also granted several awards to recognize and appreciate their very strong performance despite the challenging project implementation environment of 2015.
Specifically, 5 projects are awarded with the Best Project Management Team for their good delivery of outputs such as contract awards and disbursement, including their quality. They are:
i) Community Managed Irrigated Agriculture Sector Project – Additional Financing
ii) Community Irrigation Project
iii) Second Small Towns Water Supply and Sanitation Sector Project
iv) Information, Communication and Technology Development Project (Public Service Commission component)
v) Tanahu Hydropower Project
Similarly, Raising Income of Small and Medium Farmers Project won the Best Performance in the important thematic area of Gender and Social Inclusion.
ADB also acknowledged contractor CTCE- Kalika Construction J/Vas the Best Performing Contractor in 2015for completing a technically challenging bridge construction over the Koshi River at Chatara under the Emergency Flood Damage Rehabilitation Project in 2015.
ADB began lending to Nepal in 1969. ADB’s cumulative assistance to Nepal by the end of 2015 stood at $4.6 billion. It comprised of 134 loans ($3,721.4), one sovereign loan from Ordinary Capital Resource ($2 million), 35 grants ($826.7 million) along with five non-sovereign loans totaling $49.6 million. There has been a marked shift in the distribution of portfolio from rural and social sectors to infrastructure. As of the end of 2015, infrastructure sector comprised 76 per cent of the active portfolio.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.